The Post-9/11 Resilience of American Brands

American foreign policy initiatives have generated rising anti-U.S. sentiment in many corners of the globe. American multinational corporations (MNCs) have grown increasingly concerned that such perceptions might influence how foreign customers value their brands. They are particularly worried about their businesses in Islamic countries, where anti-American feelings are fierce.

Our research suggests, however, that American MNCs should not overreact. Strong public opposition to American foreign policy doesn’t necessarily affect consumer choice. American companies should carefully weigh the costs and benefits of abdicating the “American-ness” of their brands. They should be honest and open about their heritage, and they should not overdo introductions of locally adapted products. That tactic could appear more patronizing than culturally sensitive.

Islamic countries account for only a small fraction of business for most multinationals, even though Muslims represent more than 20 percent of the world’s population. Coca-Cola derives only 2 to 3 percent of sales from the Islamic world; only 1 percent of McDonald’s restaurants worldwide are in Islamic countries. Furthermore, only 5 percent of people in Islamic countries can afford Western brands.

It’s true that American MNCs must succeed in Islamic countries to grow. By 2015, Muslims will account for 30 percent of the world’s population. Flat population growth in the developed world overall will require multinationals to seek incremental business in those markets.

Multinationals recognized this trend in the 1990s, when they began to pay more attention to local cultures to improve their penetration of fast-growth markets. They appointed experienced expatriate managers and established Arab regional headquarters in places like Dubai, instead of directing operations from their European headquarters.

Since September 11, 2001, however, American MNCs have lowered their profile in Islamic countries, and they appear confused about how they should proceed. Their new policy seems to be to withdraw senior expatriate staff for security reasons, and generally to lie low. From a brand development perspective, this approach may be counterproductive.

We surveyed consumers in 11 countries about their preferences for American global brands. Our sample came from a broad cross-section of the populations of developed countries, and drew from about the top half of the socioeconomic spectrum in these countries. We looked at preferences for seven global U.S.-based brands in six categories: athletic wear (Nike); dairy products (Kraft); cell phones (Motorola); petroleum products (Exxon-Mobil); automobiles (Ford); and soft drinks (Coca-Cola and Pepsi).

We wanted to know whether these brands were valued differently in Islamic countries. We looked at consumer perceptions in Egypt, Indonesia, and Turkey, and then compared them with perceptions in other countries — the United Kingdom, Japan, France, Poland, South Africa, Brazil, China, and India. We measured the extent to which our respondents attributed American values to each brand. Then we solicited preferences for these brands over other global corporate brands. When we looked for correlations between the brands’ American values and the respondents’ preferences, we found none in Islamic or in any other countries.

In addition, we looked generally at whether antiglobalization sentiments affected global brand preferences. Does an antiglobalization segment exist, and is it particularly strong in Islamic countries? We did find a significant antiglobal segment, about 13 percent of our sample. But, remarkably, this segment was not the largest in the three Islamic countries; in fact, the strongest responses came from China and the United Kingdom.

These findings suggest that American multinationals have exaggerated beliefs about how anti-American sentiment is affecting consumer choice, and, therefore, that the current retrenchment is unwise.

An American global brand — whether it is Coke, Pepsi, Nike, Motorola, Ford, or Kraft — is understood foremost as global, not American. Even brands that use American values as part of their symbolism don’t seem to positively or negatively sway consumers’ opinions of the brand.

We also found that Islamic consumers were even more favorably disposed toward the positive characteristics of global brands — their reputation for quality and status value in particular — than were consumers in non-Islamic countries.

Given our findings, we were not surprised to learn that Coke and Pepsi turned in their most successful year ever in the Arab countries in 2003. American multinationals should wear their global success proudly, rather than try to hide it.

In non-Islamic countries, American MNCs increasingly seek the advice of local partners and franchisees on how to adapt products and advertising to local tastes. They are delegating more product development and marketing-budget authority to local managers, and emphasizing their local ownership. They use more local raw materials and employ more local people so that they can be seen as local companies in the eyes of suppliers and customers.

This is the right approach. American companies should have the confidence to treat Islamic countries as they do all the foreign markets in which they operate. Indeed, they would do well to follow the same “glocal” strategies (global reach, local implementation) that have served them well in other parts of the world.

To pursue these courses of action in the Islamic world, however, MNCs must develop more senior executives who understand the cultures and know how to do business there. Similarly, the drive for diversity in the multinational company boardroom should be global, not just national, in its perspective. Today, how many Fortune 500 companies’ boards of directors include a Muslim? How many of their top executives are Muslim? All too few.

Author Profiles:

John A. Quelch ([email protected]) is professor and senior associate dean for international development at Harvard Business School. He is coauthor, with Christopher A. Bartlett, of Global Marketing Management (Prentice Hall, 1998) (4th edition) and, with Edward J. Hoff, of the 1986 landmark Harvard Business Review article “Customizing Global Marketing.” Douglas B. Holt ([email protected]) is assistant professor at Harvard Business School, where he specializes in cultural approaches to branding and advertising. His book How Brands Become Icons: The Principles of Cultural Branding will be published by Harvard Business School Press in 2004.

Stay connected with strategy+business

Articles published in strategy+business do not necessarily represent the views of the member firms of the PwC network. Reviews and mentions of publications, products, or services do not constitute endorsement or recommendation for purchase.

strategy+business is published by certain member firms of the PwC network.